WTF? The USA BANNING short selling like some 3rd world country??

[we_are_toast]

Re: WTF? The USA BANNING short selling like some 3rd world country??

Anyone knows if the naked short selling rule is going to restrict options market makers as well?

I've been thinking about the effects on the option market since I just bought a bunch of puts on some of the banks.

If I buy a put, I'm buying a contract that requires the seller to buy stock from me at the strike price (if exercised). If I exercise the option, I would need to BUY stock and deliver it to the seller.

If I buy a call, I'm buying a contract that requires the seller to deliver me his stock (if exercised). If I exercise the option, the seller would need to BUY stock and deliver it to me.

So the way I see it, options shouldn't require the shorting of stocks, although some might short to hedge their positions.

What worries me is the ETF's that short. How can they exist? What happens to the positions in these ETF's?

It's really getting crazy.

[Jay]

Re: WTF? The USA BANNING short selling like some 3rd world country??

Jay, today it was up 19.76 and down 24.51 from its previous close! What is your definition of "fireworks."

It hit 200 earlier in the year when things were less chaotic.

[GRG55]

Re: WTF? The USA BANNING short selling like some 3rd world country??

Seems like a smart thing to do at this point. What's "3rd world" about it?

That's exactly what they want you to believe...

Sapiens has probably died of laughter, rolling on the floor after this idiot move...;)

[phirang]

Re: WTF? The USA BANNING short selling like some 3rd world country??

That's exactly what they want you to believe...

Sapiens has probably died of laughter, rolling on the floor after this idiot move...;)

The "3rd world" part of it is now the SWF's etc can buy up what they want.

US fire-sale is on!

[Jay]

Re: WTF? The USA BANNING short selling like some 3rd world country??

The "3rd world" part of it is now the SWF's etc can buy up what they want.

US fire-sale is on!

Isn't the next move, "sorry your Treasuries aren't good here, umm actually they are good for real estate and financials..."

[phirang]

Re: WTF? The USA BANNING short selling like some 3rd world country??

Isn't the next move, "sorry your Treasuries aren't good here, umm actually they are good for real estate and financials..."

The Chinese still want natural resources and technology, but if they need to go through a few brokerages in the process, so be it.

[Rantly McTirade]

Re: WTF? The USA BANNING short selling like some 3rd world country??

Actually, I'd go....
Bush=Polk(less competent than JKP, but healthier so got 2 terms...)
Al Z. Heimer/McInsane=Zach Taylor
Which means.....
Girly Sue(per Cletus Spuckler)=New Millenium Millard Fillmore!:p

[jimmygu3]

Re: WTF? The USA BANNING short selling like some 3rd world country??

And the jokers actually think that that will bring more trust into the financial system.

People are completely losing their minds. Short selling actually increases liquidity on a stock. And what are they going to do about options, disallow put contracts perhaps? Just insane!

That was my first thought, Tulpen. Aren't they just squeezing the balloon in one spot and creating a bubble in the other? I'm no expert on options and derivatives, but I'm sure there are instruments that can directly emulate a short sale. To stop inverse bets on stocks you would have to outlaw options & derivatives altogether.

[chrisk]

Re: WTF? The USA BANNING short selling like some 3rd world country??

An time tested American tradition.

Thirty-first on First
Feb. 29, 1932 (Time Magazine)

Following a ruling by the governing board of the New York Stock Exchange that, after April 1, member firms must not lend securities without written consent of the owners, an action to curtail short selling,

Great find, Fred!

So I checked out DJIA prices around that time, and guess what happened? The Dow went up for about a week after that, from about 82 to 87. Then -- it went into a 4 month long plunge, from 87 down to about 41 (reaching the ultimate low for the Dow in the Great Depression).

Aside from that sobering observation, it's also interesting to me that back then they waited until 3 years and a 75% drop into their decline before pulling out these big guns, whereas we have only managed a year and a 25% drop. Hello, Inflation.

[ASH]

Re: WTF? The USA BANNING short selling like some 3rd world country??

Bush = Coolidge
If McCain becomes president, he'll become Hoover.

Obama - not sure yet.

I had sort of assumed whoever gets the office will be Hoover. Is it really plausible at this point to save the bacon sufficiently to be thought well of? It seems to me that even in the best managed case, people will see their standards of living erode, and will give the political leadership poor marks. What is the scenario in which the next President is loved?

However, if McCain becomes President, I expect that not only will he be Hoover, the Republicans will be in the doghouse for a very long time to come.

[Tulpen]

Re: WTF? The USA BANNING short selling like some 3rd world country??

What is the scenario in which the next President is loved?

Go to war.

[Jim Nickerson]

Re: WTF? The USA BANNING short selling like some 3rd world country??

I'm not positive about facts here, but when the SEC banned naked short shelling on some financial stocks beginning on July 16th, that was a temporary move.


Surely someone knows when that restriction was removed. If you know will you please tell the the date the order expired.

Thanks.

[Jim Nickerson]

Re: WTF? The USA BANNING short selling like some 3rd world country??

I'm not positive about facts here, but when the SEC banned naked short shelling on some financial stocks beginning on July 16th, that was a temporary move.


Surely someone knows when that restriction was removed. If you know will you please tell the the date the order expired.

Thanks.

I found it. http://www.sec.gov/news/digest/2008/dig071608.htm

SEC News Digest Issue 2008-137 July 16, 2008 COMMISSION ANNOUNCEMENTS SEC Enhances Investor Protections Against Naked Short Selling On July 15, the Securities and Exchange Commission issued an emergency order to enhance investor protections against "naked" short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks. The SEC's order will require that anyone effecting a short sale in these securities arrange beforehand to borrow the securities and deliver them at settlement. The order will take effect at 12:01 a.m. ET on Monday, July 21. In addition to this emergency order, the SEC will undertake a rulemaking to address these issues across the entire market. "The SEC's mission to protect investors, maintain orderly markets, and promote capital formation is more important now than it has ever been," said SEC Chairman Christopher Cox. "Today's Commission action aims to stop unlawful manipulation through 'naked' short selling that threatens the stability of financial institutions. We will continue our vigorous commitment to investors by working within the SEC and in close cooperation with our regulatory counterparts to promote the continued health and vibrancy of our markets." The Commission's emergency order, pursuant to its authority under Section 12(k)(2) of the Securities Exchange Act of 1934, will be effective at 12:01 a.m. ET on July 21, 2008 and will terminate at 11:59 p.m. ET on July 29, 2008. The Commission may extend the order to continue it in effect thereafter if the Commission determines that the continuation of the order is necessary in the public interest and for the protection of investors, but for no more than 30 calendar days in total duration. The securities identified in the Commission's order: Company Ticker Symbol(s) BNP Paribas Securities Corp. BNPQF or BNPQY Bank of America Corporation BAC Barclays PLC BCS Citigroup Inc. C Credit Suisse Group CS Daiwa Securities Group Inc. DSECY Deutsche Bank Group AG DB Allianz SE AZ Goldman, Sachs Group Inc GS Royal Bank ADS RBS HSBC Holdings PLC ADS HBC and HSI J. P. Morgan Chase & Co. JP Lehman Brothers Holdings Inc. LEH Merrill Lynch & Co., Inc. MER Mizuho Financial Group, Inc. MFG Morgan Stanley MS UBS AG UBS Freddie Mac FRE Fannie Mae FNM (Press Rel. 2008-143) Then, on 7/29/08 SEC Extends Order Limiting Naked Short Selling Through August 12 http://www.sec.gov/news/press/2008/2008-155.htm FOR IMMEDIATE RELEASE 2008-155 Washington, D.C., July 29, 2008 — The Securities and Exchange Commission today extended an order issued July 15 to enhance investor protections against naked short selling in the securities of financial institutions to which the Federal Reserve has granted temporary access to liquidity facilities on an emergency basis. The extended order will be in effect until 11:59 p.m. EDT on Aug. 12, 2008, and will not be further extended. The Commission's decision to extend the order for a second 10-day period, in addition to furthering the purposes of the original order, will permit the Commission staff to collect and analyze additional data on the impact and effect of the order's provisions. Following expiration of the extended order, the Commission will proceed immediately to consideration of rulemaking which would become effective after public notice and comment. The purpose of the rulemaking is to provide additional protections against abusive naked short selling in the broader market, while allowing the legitimate short selling essential to efficient, highly liquid markets. The SEC’s order requires short sellers in the securities of the designated institutions to arrange to borrow the securities at the time of sale so that the buyers will receive the stock they purchased on time. Selling short without borrowing the stock to be sold, and failing to deliver it, is called naked short selling. “The order is designed to protect legitimate short selling in these securities, but helps prevent illegitimate naked short selling and potential ‘distort and short’ manipulation,” said SEC Chairman Christopher Cox. “In addition to continuing the existing order against naked short selling, the Commission will continue exploring other remedies for the broader marketplace to further protect investors from ‘distort and short’ artists.” Chairman Cox recently reported to the Congress that the Commission will soon consider rulemaking to apply additional protections against abusive naked short selling to the broader market. The Commission’s order was issued under its emergency authority provided in Section 12(k)(2) of the Securities Exchange Act of 1934. The Act limits emergency orders to 10 business days. The total duration of the original order plus extensions may not exceed 30 calendar days from the date of the original order.

[c1ue]

Re: WTF? The USA BANNING short selling like some 3rd world country??

I had sort of assumed whoever gets the office will be Hoover. Is it really plausible at this point to save the bacon sufficiently to be thought well of? It seems to me that even in the best managed case, people will see their standards of living erode, and will give the political leadership poor marks. What is the scenario in which the next President is loved?

Theoretically, Obama could NOT subsidize Wall Street's game.

Obama could marshall the still somewhat potent US economy and government into rebuilding infrastructure, repaying debt, reducing unnecessary government overhead, instituting single payer healthcare, separating the special interests out of government, etc. In other words, Teddy Roosevelt.

But then again, he could also NOT have taken all that campaign money.

Teddy was a fighter - whatever the morals of the Spanish American war, Teddy did participate in an extremely personally risky endeavor.

Obama is a conciliator. No fighting, no toughness, no plan. Lots of nice ideas.

Let's game Obama's options out: Fight the good fight, suffer for 40 years (remaining lifespan), then 10 years after that be considered a great president.

Or, with the full machinery of the present system behind you, do only the minimum but spin mightily. Blame it all on Bush and Iraq, while quietly ramping up Pakistan and 'assisting' Georgia.

Hmmm?

[Supercilious]

Re: WTF? The USA BANNING short selling like some 3rd world country??

Everybody mises the point here???

Try a test drive of this hypothesis. The real goal of the Fed is to eliminate completely gold as a class of power money (It would take a long message to explain why the fed needs to get rid of gold as a class of money altogether).

In order to do this they've chosen the path of flooding the international financial system with treasuries.

In order to flood the market with treasuries they need to create a succession of controlled shocks which create a huge demand for treasuries + allows for for an unprecedented process of wealth transfer at a global scale for those let's say "astute and nimble investors"

Everything is done through an uninterrupted chain of problem-reaction-solution operations.

Please watch the clip explaining the problem-reaction-solution concept again and let's see how it applies to the current "crisis"




Now let's try to warm our neurons with a bit of Q&A:

Logic Set 1:
Q: Who is responsible for creating the current mess (housing/subprime/commodities/derivative bubbles) by keeping the rate at insanely low levels for a very long time?
A: The Federal Reserve System

Q: Who was responsible with maintaining the stability of our financial system and protecting as from an economic crisis?
A: The Federal Reserve System

Q: Who is supposed to save us now from total economic collapse?
A: The Federal Reserve System



Logic Set 2:
Q: What exactly created all the bubbles that brought us into this mess?
A: A flooding of global financial system with treasuries.

Q: In order to protect us form a major crisis, what was the Federal Reserve System supposed to prevent/avoid ?
A: A flooding of global financial system with treasuries.

Q: What is the solution offered by the Fed to save us from imminent economic collapse?
A: A flooding of global financial system with treasuries.

Problem-Reaction-Solution

Now going back to the subject of this thread.... This is outright funny!!!

OK, IMHO naked short selling should be illegal and people doing that should go to jail, but let's see what happens next after this new measure "intended" to "provide market stability":

1) Stocks raise and all oblivious people believe we are out of the woods. The longs begin to trickle in.

2) We had a market depressed by fear and by thuggish naked short selling. Suddenly the cascade of sales of non existing shares dries up. Some naked shorters are forced to cover at a loss.

3) Market sentiment improves.

4) There is a springboard effect and stocks raise faster.

5) Suddenly some "gifted" and "nimble" investors sell all their shares when the upward trend is just about to loose steam (making a fortune in the process)

6) In a low liquidity market with jittery investors just tasting optimism, when you take out the "virtual scam liquidity" of naked short selling, an avalanche of selling (no shorting no naked shorting needed, just selling shares inconspicuously bought at the low before the "announcement") results in a market crash panic mass hysteria.

7) Shares plummet in a 1929 style precipice.

8) Everybody wets and browns his or hers pants ( "Oh God ... it's the Great Depression to the power of 10!!!!")! Everybody freaks out completely crying : "Ben please heelp us !!!! You are our only hope, pleeeeaaase saaaave uuuusss! Do something !!!!"

(Please prepare yourselves to see people going nuts and loosing it completely while talking/creaming/gasping for air live on Bloomberg, CNBC and CNN )

9) With a heavy heart Ben realizes he has to sacrifice his own principles in order to save us from an unthinkable disaster. Against his deepest beliefs decides to do something he has never been done before : ... he .....FLOODS THE MARKET WITH TREASURIES !!!!

Problem-Reaction-Solution

Now please take your seat, grab a soda and a bag of popcorn and wait to have a good laugh watching everybody freaking out completely for a "crisis" that doesn't exists!